New Zealand's terms of trade near 40-year high

RebeccaHoward

WELLINGTON, New Zealand--Strong dairy prices pushed New Zealand's terms of trade sharply higher in the third quarter, leaving the gauge of the country's purchasing power at its highest level since the December 1973 quarter.

The merchandise, or goods, terms-of-trade index rose 7.5% from the second quarter, Statistics New Zealand said Monday, above the 2.9% rise expected in a Wall Street Journal poll of nine economists. The index was up 15.9% compared with the year-earlier quarter.

"Dairy export prices helped lift the terms of trade to their highest level since 1973," Chris Pike, prices manager at the statistics office, said. Excluding dairy, the terms of trade would have increased by 2.5%.

The rise in New Zealand's quarterly terms of trade means that some 7.5% more imported goods could be funded by the country's exports in the September quarter than in the prior quarter.

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